Friday, February 26, 2016

GAO | Three Big U.S. Agencies Unauditable

Yesterday the GAO issued its report on its audit of Federal agency spending. Its summary is here. The summary includes a link to the full report.

For FY 2015 three big U.S. agencies–the Department of Defense, Department of Housing and Urban Development, and the Department of Agriculture–failed to get clean opinions. Their accounts had "material weaknesses". Last year (FY 2014), by contrast, almost all of the key federal agencies received clean audit opinions.

In addition, the GAO highlighted the following risks:

Pension Benefit Guaranty Corporation (PBGC) liabilities exceeded its assets by more than $76 billion as of the end of FY 2015.

Fannie Mae and Freddie Mac reported maximum remaining contractual commitment to the GSEs, if needed, is $258.1 billion.

U.S. Postal Service has reached its borrowing limit of $15 billion and finished FY 2015 with a reported net loss of $5.1 billion.

Wall Street on Parade comments that people who think that Donald Trump will clean up this mess should take a look at his own financial reporting as required under campaign finance laws.

TERRORISM | Feb. 26–First WTC Attack, 1993

February 26, 2016–Today in 1993 a massive explosion occurred in the parking garage underneath the World Trade Center in New York City.

At that time I was working for the New York City Comptroller as Chief Economist and the first I knew of the destruction was the large number of police and fire vehicles headed south.

I heard the sirens as I was leaving for the airport on Friday evening for a vacation with my family and parents-in-law in Florida.

Six people died in the explosion and another thousand suffered injuries. When I got to Florida I was contacted about estimating the economic impact. I returned early, on Sunday, and started making estimates based on reports that were coming in on the damage to the cars in the parking lot, insurance claims, the damage to the building, the impact on security and the overall impact on the outlook for the New York City economy and tax revenues.

Meanwhile, investigators at the bomb scene found a section of a van frame that had been at the center of the blast, with the vehicle identification number still legible. Detectives interviewed the Ryder Rental Agency in Jersey City, which gave the renter as Mohammed Salaamed, who reported it stolen on February 25. Someone named Salameh in the FBI database as a potential terrorist. The renter returned to Ryder to get back his $400 deposit and when he came to collect it, the FBI was waiting to arrest him. His notes led them two other suspects.

One of the terrorists was found to have bought hydrogen tanks from AGL Welding Supply in New Jersey and three tanks marked “AGL Welding” were found at the site of the bomb.

The owner of a storage facility in Jersey City reported he had seen four men loading a Ryder van on February 25. Sure enough, investigators found enough chemicals there, including nitroglycerin, to make another bomb, along with videotapes on bomb-making that led to a fourth suspect. Each of the men was sentenced to 240 years in prison.

These terrorists did not bring down the World Trade Center because the force of the bomb was taken by the first of the steel pillars, protecting the next in line. Repairs were expensive but the buildings stood.

A World Trade Center Property Risk Report, prepared for Silverstein Properties in anticipation of the WTC lease (Source:, FOIA request.), asserts (p. 29) that the Maximum Forseeable Loss from another terrorist act would be five weeks' rent:
The 1993 terrorist bombing of the WTC resulted in a maximum forseeable property loss. This event shut Tower 1 down for 6 weeks and Tower 2 for 4 weeks. The explosion, that occurred in the garage area of B-2, caused portions of the Plaza and two Subgrade floors (about 4 bays by 4 bays) to collapse on to the B-6 level damaging mechanical and electrical equipment of the Chiller Plant. As large a blast as it was, there was negligible structural damage done to structural members. Damage was limited to the replacement of these concrete floors, repairing spalled concrete where reinforcing steel had been exposed and rebuilding non-bearing walls.
The magnitude of this type of MFL loss can be estimated at 5 weeks rent or 1/10th of the $364m annual rent or $35m. Plus property damage to the building from the 1993 incident is estimated to be $175m and equipment damage of $120m or a total of $330m.
On the subject of the possibility of an aircraft striking one of the towers, the scenario was considered "highly unlikely".
In 1946 a military aircraft struck the Empire State Building. Since that time the manner in which aircraft are "controlled" has dramatically changed. In the event [of] such an unlikely occurrence, what might result? The structural designers of the towers have publicly stated that in their opinion that either of the Towers could with stand such an impact from a large modern passenger aircraft.
The ensuing fire would damage the "skin", in this scenario, as the spilled fuel would fall to the Plaza level where it would have to be extinguished by the NYC Fire Department. The replacement of the "skin" is estimated at 35% of the building replacement value or $420m. Loss of rents for 1 year or $150m for a total estimate of <$600m.
For MFL (maximum forseeable loss) determination methodology, see page 88 of the pdf.
On September 11, 2001, the World Trade Center was again attacked. The damage was approximately 100 times greater than the impact of the 1993 bombing.

Sunday, February 21, 2016

RETIREMENT | Planning and Saving

I have a post up on my Network Solutions website ( that gives various self-help calculators.

As a result, I get suggestions all the time for additional resources to add. I check these out and often they promote a particular product. The writer is a paid promoter and I tend to go no further.

The following articles relating to retirement savings seem to be genuinely useful, so I am posting them here, rather than trying to update the website.

If you question any of these resources, or have additional ones to suggest, please comment or send me an email at john[at]

Sunday, February 14, 2016

JAPAN | Video History

History of Japan – definitely entertaining and seems to cover the ground I am familiar with. Early emperors and shogunates, samurai code, European and American (Commodore Perry) visits, Korea-Chinese conflicts, two world wars, rapid economic growth.

Video starts slowly, ends fast, a good formula. The history has been viewed 5 million times, but not so much yet in Japan.

Saturday, February 13, 2016

R.I.P. | April 7–Lazăr Edeleanu, 75 Years Ago (Updated Aug. 3, 2016)

Lazăr Edeleanu, 1861-1941
Feb. 14, 2016–On April 7, 1941, 75 years ago, Lazăr Edeleanu died at 79 years of age. Born Sept. 1, 1861 in Romania, he was a genius who is still well known for two major breakthroughs in chemistry:
  • He was the first to synthesize amphetamine, in 1887 while pursuing his doctorate in chemistry at the University of Berlin. 
  • He invented the Edeleanu process, still in use, for cracking down and refining crude oil.
A Jewish Romanian, he was a revered scientist who traveled freely among Allied and Axis countries to advise on petroleum and other issues during the first year of WW2 in Europe.
His story does not seem to have been told properly, at least in English, and it deserves to be.

Hitler, Amphetamines and the Chemical Industry

Lazăr Edeleanu's two great inventions both turned out to be of acute interest to Adolf Hitler, personally and as a vehicle for his campaign to control the world. To wit:
  • Hitler was personally addicted to amphetamines for most of the time of his leadership of the Nazi Party. Dr. Theodor Morell became Hitler's doctor in 1936 and first prescribed a probiotic for Hitler's stomach cramps and then intravenous injections of a methamphetamine, Pervitin, created by Dr. Fritz Hauschild. A 2015 book in German says that during 1941-45, Hitler had 800 injections of meth and steroids and in addition took these stimulants via 1,100 pills (Ohler, 2015). Hitler would never have passed a doping test. An American military intelligence report says Hitler took 74 different types of medications.
  • Many Wehrmacht and Luftwaffe officers and troops took Pervitin. The Nazis' chief physician, Dr. Otto Ranke, called Pervitin a "valuable drug"and suggested German generals use it. General Erwin Rommel did so, reportedly giving his soldiers amphetamines to allow them to go for four days in a row during the 1940 Ardennes offensive. The same happened with the Nazi assault on the Soviet Union, with less evidence of effectiveness. Between April and July 1940, soldiers and airmen for the Wehrmacht and Luftwaffe ingested 35 million 3-milligram doses of Pervitin.
  • The main money that funded the Nazis' final victory in 1933 was advanced for business reasons by I. G. Farben (IGF), the largest chemical company in the world and the largest company anywhere outside of the United States (which then accounted for the world's three largest companies). IGF used the Edeleanu Process for cracking down its petroleum, and the process is still used by the inheritors of IGF's plants.
Stimulants equivalent to Pervitin were also, to be fair, introduced in the United States in the 1930s.  Starting in 1932, Gordon Alles at Smith Kline & French developed a 10 mg. amphetamine tablet and during the years 1936-39 SKF sold 50 million such tablets in the USA under the name Benzedrine.  Initially they were used by artists and students seeking inspiration or stimulation, and then by the military. Athletes find the drug can enhance performance, at least at first. It enhances productivity until it becomes an addiction and destroys the user, which is why there are anti-doping rules.

Who was Edeleanu?

After receiving his doctorate in chemistry from Berlin, Lazăr Edeleanu worked at the Royal College of Artillery in London as a lecturer. He was also an assistant to famed Chemistry Professor W. R. E. Hodgkinson, an active commentator on scientific papers relating to ammunition. During this period, Edeleanu collaborated with C.F. Cross and E.J. Bevan to create an artificial fireproof silk and with R. Meldola to create oxazine-based dyes. He was sought after by German chemical companies because his inventions were important for continuing German advances in dyeing technology and global market share.

Returning to Romania, Edeleanu was hired by chemist Constantin I. Istrati as an assistant and then as a lecturer at the Faculty of Sciences in Bucharest's Organic Chemistry Department. In 1906 he was appointed Head of the Chemistry Laboratory at the Geology Institute, founded that year, and director of Vega Refinery near Ploiești, a refinery owned at that time by the German company Diskont. In 1907, along with Ion Tănăsescu, he co-organized the Petroleum Congress in Bucharest and co-authored a monograph on the physical and technical properties of Romanian crude oil.

His most significant invention, in 1908, was the Edeleanu process, in which petroleum is refined with liquid sulfur dioxide to extract aromatic hydrocarbons such as benzene, toluene, and xylene. Advantages of the Edeleanu process are that the cracking can occur at lower temperatures and this allows for the production of higher-quality oil. The procedure was first applied experimentally in Romania and then in France (Rouen), Germany, and the rest of the world.

In 1910, Edeleanu returned for most of the rest of his life to Germany where he founded Allgemeine Gesellschaft für Chemische Industrie. Edeleanu had godlike status among Nazi industrialists as a preeminent scientist and appears to have been able to travel in and out of Germany and Romania to the end of his life even though Jew-hunting in these two countries was in high gear by early 1941.

Edeleanu obtained 212 patents for inventions in Romania, the USA, and Europe. His awards include: 1910, Member of the Society of Natural Sciences in Moscow; 1925, Honorary Member of the Institution of Petroleum Technologists in London (1925); and 1932, Theophilus Redwood Medal for lifetime scientific achievement in analytic chemistry.

Edeleanu returned for the last time to Romania, where he died in 1941 in Bucharest.

Edeleanu's Company

The company changed its name to Edeleanu GmbH in 1930. By 1960, there were 80 Edeleanu cracking facilities worldwide.

After Hitler became Führer, Edeleanu's company was bought by the Deutsche Erdöl-AG, later called DEA. It went through several subsequent ownership changes until in 2002 it was bought by Uhde GmbH in 2002, part of the Thyssen Krupp trust, and it is now part of L1, owned by a Russian magnate.

Romania in WW2

Romania allied itself with Nazi Germany on July 5, 1940. The Nazis took this as an invitation to occupy the country and drain it, without appropriate compensation, of people and natural resources to throw into the attack on the Soviet Union. King Carol II, the "playboy king", who had pursued the alliance with Hitler, abdicated on September 6, 1940, leaving fascist Prime Minister Ion Antonescu and the Iron Guard in charge. Antonescu signed the Tripartite Pact in November 1940, tying Romania to the German-Italian-Japanese Axis until 1944, when Romania–now nominally ruled by King Michael I in exile–switched allegiance to the Allies just in time to gain some respect after WW2.

During WW2, 500,000 Romanians reportedly lost their lives, about 3 percent of the population. I am thinking that this must be an underestimate if the losses include victims of Allied bombing, Romanian troops killed in action, and Jews and Roma consigned to concentration camps.

The number of Romanian troops engaged on the Eastern Front was second only to that of Nazi Germany itself–more than 686,000 men under arms in mid-1941 and about 1.22 million men in mid-1944. The number of Romanians fighting in the Soviet Union exceeded all of Germany's other allies combined. A report by the Romanian Government in 2004 concludes:
Of all the allies of Nazi Germany, Romania bears responsibility for the deaths of more Jews than any country other than Germany itself. The murders committed in Iasi, Odessa, Bogdanovka, Domanovka, and Peciora, for example, were among the most hideous murders committed against Jews anywhere during the Holocaust. Romania committed genocide against the Jews.
Hitler's Debt to IGF, Before WW2

IGF became a giant chemical conglomerate, bringing together in 1925 eight leading German chemical manufacturers, including Bayer, Hoechst and BASF, which at the time were the largest chemical firms in the world. Its name is taken from Interessen-Gemeinschaft [I.G.] Farbenindustrie AktienGesellschaft (Private-Limited-Company Syndicate of Dye-Making Corporations). During its heyday, IGF was the largest chemical company in the world and the world's fourth-largest company, after General Motors, U.S. Steel, and Standard Oil of New Jersey.

On the German market, IGF had a monopoly and was Germany’s largest single exporter. Its founder and first chairman of its board was Dr Carl Bosch, who had previously been the chief executive officer of BASF. Bosch was of equivalent status to Edeleanu, having won the Nobel Prize in Chemistry in 1931 and the Goethe Prize in 1939.

Costly innovations such as the production of synthetic rubber (Buna) from coal or gasoline, persuaded IGF, when the economic crisis hit at the end of the 1920s and continued into the 1930s, that the company should establish close ties with Hitler and the Nazi Party.

Hitler was meanwhile eager to establish the closest of ties with IGF, not only because of their access to money to finance his campaign, but his recognition of the opportunity that IGF presented for Germany to become independent of imported raw materials. To be profitable, the new IGF products needed to go to large-scale production and IGF needed an assured market.

Hitler indicated that he would guarantee purchases  by the state of these products in large amounts. At a meeting of leading German industrialists with Hjalmar Schacht (head of the Reichsbank), Hermann Göring and Heinrich Himmler, held on February 20, 1933, IGF held up its side of the Faustian bargain by contributing 400,000 reichsmarks to the Nazi Party. This was 13 percent of the total sum of 3 million reichsmarks raised at this meeting by German industrialists for the Nazi Party’s election campaign.

But its importance went far beyond the percentage because it was the earliest money and it was the largest single contribution. IGF's imprimatur opened the door to Hitler's becoming Führer and contacts between IGF’s management and the Nazi government became increasingly close, not just because of IGF's gift but because the giant chemical conglomerate was an indispensable element in the Nazi’s drive to re-arm.

The irony of this is that:

  • Of the 12-member IGF supervisory board, four were Jewish.
  • Even after the 1933 campaign gift, Nazi propaganda continued attacking IGF as an international Jewish firm exploiting its workers.

Once Hitler established himself as Führer, IGF adapted swiftly enough to the regime’s ideological requirements:
  • Through economic and political blackmail, IGF took over important chemical factories in the areas annexed to the Reich or occupied by the Germans. Some of my Dutch relatives in the fertilizer industry were bankrupted in 1936 by IGF's actions in the Dutch chemical market. Romania was of special importance to Hitler because of its oil fields. 
  • In 1933 Carl Bosch objected–in vain–to the removal of Jewish scientists from the company and from various scientific institutions.
  • The Four-Year plan proposed by Hitler in 1936 put the entire German industry on a war footing.
  • By 1937 no Jews were left in the IGF executive or on its board of directors. The majority of the board members joined the Nazi Party. Bosch resigned his post as chief executive officer in 1935 and was instead elected chairman of the board.
  • After a long illness, Bosch died on April 26, 1940, a week before the Nazi invasion of the Netherlands.
IGF During WW2

Krauch took Bosch's place as chairman of the board, adding this position to the different posts he held in the Four-Year Plan administration. To prepare for war against the Soviet Union, the IGF board, with Nazi Government support, decided to establish additional factories for the production of Buna and synthetic fuels.

The IGF board decided to locate its major new factory at Auschwitz in Upper Silesia. The concentration camp already being built offered IGF a cheap workforce of up to 10,000 prisoners to build the new factory. Board members Otto Ambros and Heinrich Butefisch were made responsible for the Auschwitz plant as managers in charge of Buna and gasoline. Dr. Walter Durrfeld became general manager. At first, the plant managers protested against maltreatment of the prisoners working in the plant, who were in poor physical condition, but Durrfeld eventually went along with the SS plan to speed up the work. Workers who could not keep up went to the gas chambers and were replaced with a flow of new recruits from the camp who were not yet enfeebled.

Five IGF-owned or -contracted manufacturing plants produced Buna, most of which utilized prison (slave) labor: (1) Dwory. At its peak in 1944, this factory made use of 83,000 slave laborers. The pesticide Zyklon B, for which IGF held the patent, was manufactured by Degesch (Deutsche Gesellschaft für Schädlingsbekämpfung), of which IGF owned 42.2 percent (in shares) and which had IGF managers on its Managing Committee. (2) Frankfurt (IGF building at Frankfurt, and a Hoechst AG chemical factory in Frankfurt bombed by the RAF on September 26, 1944). (3) Ludwigshafen and Oppau. (4) Pölitz, North Germany (today Police, Poland). In 1937, IGF, Rhenania-Ossag, and Deutsch-Amerikanische Petroleum Gesellschaft founded the Hydrierwerke Pölitz AG synthetic fuel plant; by 1943, the plant produced 15 percent of Nazi Germany's synthetic fuels. (5) Waldenburg.

In mid-1942 a new section of the concentration camp, Auschwitz-Monowitz, was established, close to the site of the IGF factory, to house the prisoners working there and save the time-consuming daily march from and to the main camp. As a business, IGF's Auschwitz project was a bust. The Buna production never got started, in part because of Allied air attacks. Only small quantities of synthetic fuels were ever produced. The starved and terrorized prisoners' productivity never came close to IGF’s expectations. Their work was considerably inferior to that of workers who went home to a real dinner at the end of the day. The slave laborers were a constant source of disappointment to their Nazi managers.

IGF After WW2

After the defeat of the Third Reich, at the International Military Tribunal held in Nuremberg, the United States, as the occupying power, conducted trials against top officials of three major industrial concerns–Krupp, Flick, and IGF. The IGF Trial was the largest of the industrial trials. All defendants were indicted for the same crimes as the Krupp defendants–planning and waging of wars of aggression, conspiracy for this purpose, economic plundering, and forced labor and enslavement of prisoners of wars, deported persons, and concentration-camp inmates. Three defendants were indicted for SS membership.

In the IGF trial the chairman of the board Carl Krauch and several executives including Durrfeld were tried for

      1. Preparing and waging aggressive war. (Acquitted of all charges.)
      2. Crimes against humanity by looting the occupied territories. (Nine found guilty.)
      3. Enslaving and murdering civil populations, prisoners of war and prisoners from the occupied territories. (Five were found guilty.)

The sentences imposed on Ambros and Durrfeld were the most severe–eight years each. By 1951, however, all imprisoned IGF officials were released. After 1955 many IGF officers including Ter Meer and Ambros were again in leading positions in the German chemical industry.

In the Soviet zone  IGF plants were nationalized. However, in the other zones no change of ownership took place. The conglomerate was broken into its original three major component parts–Bayer, BASF, and Hoechst–whose balance sheets by the end of the 1950’s already exceeded that of the IGF before breakup.

The final IGF Liquidation Act of January 21, 1955, removed remaining restrictions imposed by the Allies. A court of the Federal Republic of Germany in 1953 established the principle that a Jewish prisoner forced to work for IGF in Monowitz had a right to sue IGF for compensation. The residual company IGF in Liquidation agreed to put 27 million deutschmarks at the disposal of the Jewish Material Claims Conference to cover claims of these Jewish forced laborers.

The payment was deemed voluntary and not therefore an admission of guilt. IGF paid no compensation to non-Jewish forced laborers.


Hitler and Amphetamines: Norman Ohler, Der Totale Rausch ("Total Euphoria: Drugs in the Third Reich"), 2015.

I G Farben:
The Crime and Punishment of I.G. Farben (New York, London: The Free Press).
Israel Gutman, ed., Encyclopaedia of the Holocaust (New York: 1990).
The Auschwitz Chronicle by Danuta Czech (New York: Henry Holt and Company, 1990).
Holocaust Historical Society

Wednesday, February 10, 2016

PENSION FUNDS | Beaver Award to TSP

The assets of the 1,000 largest pension funds fell 2.3 percent during the year ending September 30, 2015. Total assets of these funds was valued at $8.8 trillion. The largest five funds were again (rank unchanged from 2015):

1.  The Federal Retirement Thrift Savings Plan, Washington, D.C. with a reported $443.3 billion in assets, an increase of 5 percent. The other plans in the top 20 all reported declines. CityEconomist awards the TSP a 2016 Beaver Award for having done so well when the other 19 funds were declining.

2. CalPERS,  Sacramento, Calif., reporting $285.8 billion, a decline of 3.7 percent, well above the average loss.

3. The California State Teachers' Retirement System, West Sacramento, Calif., reporting $181.9 billion, a 2.7 percent decline, more than the average loss.

4.  New York State Common Retirement Fund, Albany, N.Y., $173.5 billion, a drop of 2.6 percent, more than the average loss.

5. New York City Retirement Systems (NYCERS), $155.1 billion, a decline of 2.3 percent, equal to the average loss rate.

As measured against the Federal Retirement Thrift Savings Plan, NYCERS did terribly, 7.3 percentage points lower.

As measured against the California and New York State pension funds, NYCERS did fine. In a blind man's kingdom, a one-eyed man is king.

Saturday, February 6, 2016

MONEY | 10 Ways to Cut Cable Bills (Updated Feb. 14, 2016)

Lieber doesn't suggest this one. I do. Also land lines.
Feb. 7, 2016–Right after his fine story on pesky recurring credit card charges, Ron Lieber has another good article in the NY Times yesterday on how to pay less for your cable service, internet, phone, alarm system or other utility.

He sat in on BillFixer agents who lower your monthly bill in return for keeping half the savings for a year.

(This business model is not actually so new. It was used by a New York City company 20 years ago that lowered my phone bill. It is also used by companies that promise to get you a cut in your property tax.)

Since good information can save you money, I will summarize the tips that Lieber picked up in his investigation, along with what I learned from the 40 comments on Lieber's article that I plowed through.

First, I should say that Lieber has a question about the ethics of BillFixer's claiming to be the customer when they are only an agent. This does seem to be illegal, long part of agency law.

However, commenters don't think it is unethical given the refusal of companies to talk with anyone but the customer and the unwillingness of cable-phone companies to communicate their prices in a transparent way. (I have asked for a list of discounts, for example, and I was told that this is internal information only available online to company agents.) Several commenters on Lieber's article argued that in their view cable companies don't treat their customers fairly or ethically, so they don't have "clean hands". The Roman Catholic moral theology that I learned has a special dispensation for untruths that don't qualify as lies, because the questioner has forfeited the right to the truth...

In any case, the following tips bypass the ethics/legality issue of agents claiming they are someone they are not, because you, the consumer, are urged to use them for yourself if you have the time. I have added a few extra tips along the way to the ones that Lieber provides. The last tip is my own.
  1. Try coming in as a Leaver. The “Cancel My Service” option on a phone tree may be the best place to start, because the best deals may be reserved for the staffers at the cable company who are responsible for trying to keep customers (they are called retention specialists). It costs a bundle to get a customer–they don't want you to leave without giving you a fine offer.
  2. Be nice. The cable company call center gets some abusive customers. You may feel that they deserve it. But the agents just work there. They have the authority to give you deals that they might not feel like giving to people who make them feel bad. They might also do some mean things to you. It has happened.
  3. Be prepared. Two ways to prepare: (1) Get information on what other companies are offering. (2) Ask your employer, former employer (if you are retired; see below) or union (or employee association) if there is a discount available for employees. Did you know that government employees or retirees get a 17 percent discount from AT&T? When I first heard about this I was astounded. It applies to Federal, state or local employees, and retirees.
  4. Fish around. Sometimes the deal may be a free service or an upgrade on service status. 
  5. Ask for a new-customer discount. With new plans every month, you are.
  6. Ask for a credit. Often a customer-service agent can just hand out a one-time credit; it has happened to me. Chatter on about a lot of unexpected bills, the needs of your children or parents, or whatever; better if it's true, which it probably is. The agent may decide to give you the credit based on considerations that have nothing to do with what you are saying, like getting on with other business.
  7. If you are a retiree, say so. Two reasons: (1) It means you probably have allowed ample time for this business. When they ask if you want to be put on hold, say "No problem, I'm in no hurry. This is important to me." (2) Be aware that corporate and government discounts usually continue for retirees. Just bring in or fax or email proof–such as a pension payment showing source.
  8. Be cautious about a proposed new plan. Does a reduced fee require a new contract? Commitment? Minimum period? Be on orange or red alert.
  9. Write down the details. Then call back. Confirm you got what you were promised. You may have not been fully informed about your deal.
  10. Cut the cord. Do you really need cable TV? Do you really need a land line? "Cut the cord" usually means cutting out cable TV and telephones. Of course most of us still need an Internet connection and this is ultimately delivered on a phone line (DSL) or a cable-company (FIOS or wire-cable line). My wife Alice and I watch our favorite shows via the Internet–Netflix or whatever, and friends send us links to free classic movies on YouTube etc. Most young people we know don't bother with a land line, because their iPhone is with them wherever they go. Increasingly we are relying for phone service on the iPhone.

Friday, February 5, 2016

JOBS | Retail Continues Strong in January 2016

The employment-to-population ratio has been
recovering. Source: BLS, Feb. 5, 2016.

Nonfarm payroll jobs rose by 151,000 in January, a falloff from the better months of late last year, the BLS announced this morning. Jobs continued strong in retail trade, food services and drinking places.

Despite a falloff in services–where job growth has for many years been more reliable than in manufacturing–health care continues strong as hospitals continue to grow. Credit the graying of America. Manufacturing has also shown good growth.

The bad news is concentrated in private educational services, transportation and warehousing. Mining jobs continued to decline, as the oil industry continues to suffer from the 70 percent drop in the price of oil compared with the peak in 2014.

Retail trade added 58,000 jobs in January, despite Walmart's report that it would close 269 stores worldwide, which translates to an eventual loss of 10,000 jobs.  Jobs grew by 15,000 in general merchandise stores, by 9,000 in electronics and appliance stores, by 8,000 in motor vehicle and parts dealers, and by 7,000 in furniture and home furnishing stores. Over the past 12 months, employment in retail trade has increased by 301,000, with motor vehicle and parts dealers and general merchandise stores accounting for nearly half of the gain. The death of brick-and-mortar retailers seems to have been exaggerated–in fact Amazon is planning to open its own brick-and-mortar outlets.

Other industries:
  • Food and beverage establishment jobs rose 47,000 in January, bringing the total for the past 12 months to 384,000 jobs.
  • Health care continued to add 37,000 jobs in January, with most of the increase, 24,000 jobs, being in hospitals. Health care has added 470,000 jobs over the past 12 months, two-fifths in hospitals.
  • Financial activities rose by 18,000 jobs in January, the largest growth area being a 7,000-job increase in credit intermediation and related activities.
  • Private educational services lost 39,000 jobs in January due to larger than normal seasonal layoffs. This sector has been plagued by revelations of debts and disappointments among students in delivery of value by some technical training programs promising good jobs at the end of the training.
  • Transportation and warehousing decreased by 20,000 in January, mostly reflecting the most vulnerable job sector–couriers and messengers–whose numbers dropped by 14,000 in January after growing rapidly in the last two months of 2015.
  • Professional and business services jobs rose by 9,000 after growing by 60,000 in December. The subcategory of professional and technical services continued to surge, adding 25,000 more jobs in January. Jobs in temp services rose more than the seasonal adjustment in December and fell by the same number in January.
  • Manufacturing added 29,000 jobs in January, following little employment change in 2015. Over the month, 11,000 jobs were added in food manufacturing, 7,000 in fabricated metal products, and 3,000 in furniture and related products.
  • Mining, which includes petroleum extraction, continued to decline by 7,000 jobs in January. Jobs peaked in this industry in September 2014 and have since fallen by 146,000 jobs (17 percent). More oil companies that over-invested in exploration are expected to go bankrupt.

Wednesday, February 3, 2016

MONEY | Why Bank Shares Swooned

This time, the presidential candidate embraces
 the label "democratic socialist".
Feb. 3, 2016–Pam and Russ Martens write a savvy blog, "Wall Street on Parade". They have been connecting dots the average person would not be able to.

In their recent post on bank stocks, they note the rapid decline in megabank stocks, with special attention to Goldman Sachs.

The decline in stock prices could be related to the drop in commodity prices, toxic loans and other economic developments.

But it may also be related to the better-than-expected performance of Sen. Bernie Sanders, who has made the case that the financial crisis of 2008 was caused by deregulation of the banking system. He wants to bring back the regulatory provisions of the 1933 Glass-Steagall Act (the deposit insurance part is still in place and the coverage has been super-extended).

Sanders is correct that FDR's feat in 1933 was extraordinary. I have been writing about how FDR's first Treasury Secretary, Will Woodin, calmed the bank panic that faced the incoming administration in early March 1933. Woodin was a Republican and was Chairman or President of two of the 20 companies in the Dow Jones Industrial Average in 1928–American Car & Foundry and American Locomotive. Woodin had a business background. He got behind financial reform and the system that he and FDR put in place in 1933 served the country well for more than half a century. It's a fair argument that we could bring back the basic concept of walling off the insured deposits and making sure that they can't be accessed, especially in an emergency, by risk-seeking investment banks.

Monday, February 1, 2016

CREDIT CARD | Curb Recurring Charges! (Updated Feb. 14, 2016)

Squeezing dollars from customers at fitness centers.
The New York Times has a good story on recurring credit charges by Ron Lieber. (He has another good one on how to save money on cable-phone-alarm charges.)

He describes a new free service called Trim that checks for and gets rid of charges for services you don't need or want.

The top three offenders, according to Trim, are:

#1 and #3: Experian and TransUnion, which charge you a monthly fee for "credit monitoring"–i.e., providing a credit score (FICO or other report) that you can get free from some credit card companies or from

#2: Planet Fitness, which requires a registered letter to cancel your monthly fitness center charges. This is a more serious problem than the credit score charges because the monthly charges are much higher. The YMCA and a fitness club in LA are also on the list of offenders. NY Sports Club has had the same requirement as Planet Fitness. The way it worked for me at NY Sports Club, I went in to the local branch where I had signed up many years before, to cancel my membership. They didn't tell me what I needed to know, which is that it can only be cancelled by a registered letter to a headquarters address. In fact the branch membership officer called in two other people so they could hear how she handled the request to cancel. Instead of telling me how to cancel, they offered to reduce the monthly amount to avoid a re-signup fee. But, again, they didn't say that this reduced amount is only good for three months, and they went back to billing me for the full amount every month. It's just a scam to collect fees from resigning members long after they have moved on from the club.

I wrote to the New York City Public Advocate to suggest a law that you should be able to cancel a membership the same way you sign up, but never heard back. If the local branch of a fitness club can sign you up on the spot, you should be able to cancel on the spot at the same place. Maybe this should be a NY State or even a Federal law. It's common sense.

Meanwhile, when you see a clause like that on any membership signup agreement, just walk away. If they have scam built into their membership form, you can imagine how many other ways they will be trying the squeeze revenue out of you.